Windmill Nursing Pavilion, Ltd. v. Cincinnati Insurance Co.
2013 IL App (1st) 122431
Ill. App. Ct.2014Background
- Windmill filed a TCPA class action against Unitherm and settled for $7 million; Cincinnati agreed to fund $3 million initially from Unitherm’s policies.
- Windmill then sought declaratory judgment to obtain the remaining funds and to resolve carved-out issues on policy coverage.
- Two Cincinnati policies (original 2003–2006 and renewal 2006–2007) included general, umbrella, and a TCPA exclusion added in the renewal.
- The TCPA exclusion in the renewal policy was contested as to whether notice to Unitherm complied with applicable law and whether it was valid.
- Windmill argued the fax advertisements were “products-completed operations hazard” and thus triggered separate $1 million coverage in addition to the general aggregate.
- The circuit court held Ohio law governed, found the notice adequate, and held the products-completed operations hazard did not apply to the faxes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the TCPA exclusion notice adequate under applicable law? | Windmill argues Illinois law applies, but Ohio law governs notice adequacy. | Cincinnati contends Ohio law applies and that the notice was separately attached, clearly worded, and adequate. | Notice adequate; Ohio law applies. |
| Does the products-completed operations hazard provide separate coverage adding to the general/umbrella limits? | Fax ads were Unitherm’s products/work and thus trigger separate $1M limit. | Fax ads are advertising, not Unitherm’s goods/work; no separate products-completed operations coverage. | No separate products-completed operations coverage applicable. |
Key Cases Cited
- Founders Insurance Co. v. Munoz, 237 Ill.2d 424 (Illinois 2010) (contract interpretation: give effect to policy terms)
- Westchester Fire Insurance Co. v. G. Heileman Brewing Co., 321 Ill. App. 3d 622 (Illinois 2001) (most significant contacts test for choice of law in insurance)
- Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520 (Illinois 1995) (choice of law factors for insurance contracts)
- Guillen v. Potomac Insurance Co. of Illinois, 203 Ill. 2d 141 (Illinois 2003) (material alteration and notice standards in policy changes)
- Hobbs v. Hartford Insurance Co. of the Midwest, 214 Ill. 2d 11 (Illinois 2005) (antistacking clauses enforceable)
- United Farm Family Mutual Insurance Co. v. Frye, 381 Ill. App. 3d 960 (Illinois 2008) (discussion of notice and choice-of-law considerations in insurance)